352.1153 St 2/44: Telegram
The Chargé in Spain (Blair) to the Secretary of State
[Received 8:23 p.m.]
28. At the German Embassy last night King Alfonso talked over the petroleum monopoly question with the French Ambassador and said he thought the Government’s taking over property without valuation and compensation was a mistake, wherefore he was instructing the Government to reconsider the central Valuation Commission’s procedure which the French Ambassador had fully discussed and characterized to the King as very unjust. His Majesty mentioned recent adverse comment in the British and French press and appeared worried by it. The French Ambassador later saw General Primo de Rivera about the entire matter, on the basis of the telegram sent by this Embassy on February 18 (No. 27, 5 p.m.). Allegations of the Spanish Finance Minister, as summarized in this telegram, were denied by the French Ambassador; and Primo promised to instruct the Valuation Commission to act in its judicial capacity, to give the point of view of the oil companies a full hearing, and to incorporate in the minutes of the Commission’s meeting all pertinent valuation data which the companies furnished and any subsequent protests. Both the King and the President of the Council assured the Ambassador of their desire to secure a fair settlement. Diplomatic representations and adverse comments in the foreign press have evidently and finally impressed both of them. Today the French Ambassador is sending Primo a memorandum of the conversation last night and asking for confirmation in writing. In view of the above, the French Ambassador and I informally advised the oil companies to present themselves again in due course before the Valuation Commission, provided the Ambassador’s understanding of the situation is confirmed by Primo. The British resident director of the Shell interests is disposed to cooperate. He will fully reserve the question of industrial value and will demand that the protest to Primo (mentioned in this Embassy’s telegram 27, paragraph 1) be incorporated in the Valuation Commission’s minutes. These conversations are being telegraphically reported to the French Foreign Office. The situation at present appears to be slightly improved. If Primo’s undertakings are carried out, the oil companies apparently will be able to return to the Valuation Commission without losing prestige, will have a chance of protesting step by step, and, finally, will be enabled to state that the so-called legal procedure provided by the royal decrees has been duly conformed to. A reply before Saturday, February 25, must be made by the companies [Page 854] to the Finance Minister with regard to reappearance before the Valuation Commission. The Department will be advised by cable when a final decision is reached. This telegram is being sent to Paris and London.